Hancock v. State Nat. Bank of Texarkana, Ark., 38201
| Decision Date | 11 February 1952 |
| Docket Number | No. 38201,38201 |
| Citation | 213 Miss. 295,56 So.2d 819 |
| Parties | HANCOCK v. STATE NAT. BANK OF TEXARKANA, ARK. |
| Court | Mississippi Supreme Court |
Ramon L. Burgess, Guy Mitchell, Sr. & Jr., and Sam Lumpkin, all of Tupelo, for appellant.
Jno. R. Anderson, Tupelo, for appellee.
The State National Bank of Texarkana, Arkansas, as plaintiff, recovered a judgment in the Circuit Court of Lee County against L. D. Hancock, doing business as L. D. Hancock and Company, defendant, for the sum of $559.92, and from that judgment Hancock prosecutes this appeal.
The action was based upon a check drawn by J. D. Hancock and Company on the People Bank and Trust Company of Saltillo, Mississippi, and payable to the order of C. B. Standridge. The check was dated November 29, 1948, and was endorsed and delivered to the McCollum Candy Company of Texarkana, Arkansas, and was then endorsed by the McCollum Candy Company and delivered to the State National Bank of Texarkana on December 2, 1948, and the full amount of the check was immediately credited to the checking account of the McCollum Candy Company by this bank. The check was then forwarded by the Texarkana bank through regular banking channels to the Peoples Bank and Trust Company for payment. Payment of the check was refused by the Peoples Bank and Trust Company, and the check was returned to the Texarkana bank on December 13, and written across the face of the check were the words 'Payment stopped.'
The plaintiff in its declaration alleged that it was the legal holder of the check in due course and for a valuable consideration, and that at the time it acquired title to the check it had no notice of any infirmity in the instrument or any defect in the title of the McCollum Candy Company.
There is no material conflict in the testimony of the witnesses. Standridge was engaged in selling candy which he obtained from the McCollum Candy Company of Texarkana, and which he delivered to the purchasers from a truck. On November 29, 1948, Standridge sold to Hancock a quantity of candy and delivered the same from his truck at Tupelo, Mississippi, and Hancock issued to him the above mentioned check in payment of the purchase price of the candy. Standridge returned to Texarkana on December 2 and endorsed and delivered the check to the McCollum Candy Company, and the McCollum Candy Company immediately endorsed the check and deposited it to its credit in the State National Bank of Texarkana, as stated above. The deposit slip issued by the bank to the McCollum Canady Company had printed on the reverse side thereof the following: * * *.'
Hancock testified that he purchased the candy from Standridge on November 29, and that the candy was immediately delivered to him, but that the candy was packed in large cases and he did not examine it until several days later, when he found that it was in poor condition and was unsalable, and that he stopped payment on the check for that reason. Standridge, after complaint had been made about the candy, came back to Tupelo, took up the candy, and agreed to return the check which had been issued to him for the candy.
W. B. Oglesby, Vice President of the Texarkana bank, testified in answer to interrogatories propounded to him, that on December 2, 1948, the McCollum Candy Company was in serious financial straits; that when the check was presented to his bank by the candy company for credit on that date the bank teller referred the matter to him, and that, after examining the credit rating of the drawer of the check he instructed the teller to handle the item and credit it to the account of the McCollum Canday Company so that the company could immediately withdraw the funds or any part thereof; and that the check was therefore purchased by the bank from the McCollum Candy Company by the deposit of the check to the credit of the candy company and by the bank permitting the candy company to make immediate withdrawals against the deposit on the same day. Oglesby testified further that the bank at that time had no knowledge that Hancock was dissatisfied with the candy purchased from Standridge or that he intended to stop payment on the check, and that it was not until a week or more after the check had been returned unpaid that G. C. McCollum stated to him that 'it appeared he would have to refund the amount of this check but that he did not have the money,' Oglesby stated further that 'In view of McCollum Candy Company's financial condition, we certainly would not have given McCollum Candy Company immediate credit for this item and allowed it to check against the proceeds if we had had any such notice or information that the maker, L. D. Hancock & Company, would not honor it when we had it presented for collection in the ordinary course of our business.'
The McCollum Candy Company had on deposit with the bank on December 2, $441.66. The amount of the check deposited was $559.92. On the same day checks aggregating the sum of $859.82 were paid from the account, leaving a balance at the close of business on that day of $141.76. The bank ledger sheets showing the details of the checking account of the McCollum Candy Company during the month of December were introduced in evidence and showed that other deposits were made to the credit of the account on December 3 and December 6, and that checks aggregating the sum of approximately $4,150.00 were paid by the bank and charged against the accout during the 10-day period from December 3 to December 13, the day on which the bank received notice that the Hancock check had been dishonored. The balance on deposit December 13 was $139.68. Oglesby testified that he had received information by telephone or otherwise prior to December 13 that two other checks aggregating the sum of $2,000.00 drawn on a bank in Cleveland, Ohio, which had been credited to the account of McCollum Candy Company, were being returned unpaid, and that on December 27 the bank closed the account by a bookkeeping entry of a credit of $2,428.27, which was charged against the bank's general account of 'Losses and Recoveries.'
At the conclusion of the testimony the plaintiff and the defendant each made a motion for a peremptory instruction. The motion of the defendant was overruled and the motion of the plaintiff was sustained. The jury under the instruction of the court returned a verdict for the plaintiff and judgment was entered thereon.
In their briefs the attorneys for the appellant argue two points on this appeal: (1) That the appellee was not a holder in due course because the check was overdue when deposited; and (2) that the appellee accepted the check for collection only, and should not have been permitted to vary or contradict the written agreement on the back of the deposit slip by offering proof to show that the McCollum Candy Company was permitted to make immediate withdrawals against the account.
We do not think that the check was overdue when it was accepted by the appellee on December 2. Section 227, Code of 1942, provides that 'A check must be presented for payment within a reasonable time after its issue or the drawer will be discharged from liability thereon to the extent of the loss caused by the delay.' And Section 234, Code of 1942, provides that: 'In determining what is a 'reasonable time' or an 'unreasonable time' regard is to be had to the nature of the instrument, the usage of trade or business if any with respect to such instruments, and the facts of the particular case.'
We have in this case no question as to the discharge of an endorser by delay in the presentation of the check for payment, or as to a loss sustained by the drawer of the check caused by the failure of the bank on which the check was drawn after the check was issued and before it was presented for payment. And in the absence of any special circumstances, the authorities are practically uniform in holding that the transferee of a check is not put upon inquiry and...
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